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Comment in the Matter of Restoring Internet Freedom

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Comment in the Matter of Restoring Internet Freedom PUBLIC INTEREST Bridging the gap between academic ideas and real-world problems COMMENT COMMENT IN THE MATTER OF RESTORING INTERNET FREEDOM BRENT SKORUP Research Fellow, Mercatus Center at George Mason University Restoring Internet Freedom Agency: Federal Communications Commission Proposed: May 18, 2017 Comment period closes: August 30, 2017 Submitted: August 30, 2017 Docket ID: WC 17-108 INTRODUCTION The Technology Policy Program of the Mercatus Center at George Mason University is dedicated to advancing knowledge about the effects of regulation on society. As part of its mission, the pro- gram conducts independent analyses to assess agency rulemakings and proposals from the per- spective of consumers and the public. Therefore, this reply comment does not represent the views of any particular affected party but is designed to assist the agency as it explores these issues.1 It is welcome news that the FCC is considering the repeal of Internet regulations and revisit- ing the classification status of Internet access. Since at least the 1970s, the Federal Communi- cations Commission and Congress have sought to reduce the reach of Title II burdens through forbearance and by narrowing the scope of “common carriage.”2 The majority of commis- sioners in 2015, however, reversed years of precedent to regulate “broadband Internet access service” (BIAS) as a “telecommunications service,” thereby subjecting Internet services and content to vague Title II obligations and political pressures. A reversal is needed. 1. The author would like to thank Melody Calkins for research assistance and Nita Ghei for helpful comments. 2. Policy and Rules Concerning Rates for Competitive Common Carrier Servs. and Facilities Authorizations Therefor, 77 F.C.C.2d 308, 359–68 (1979) (Notice of Inquiry and Proposed Rulemaking). For more information, contact Canyon Brimhall, Outreach Associate 703-993-8205, [email protected] Mercatus Center at George Mason University 3434 Washington Boulevard, 4th Floor, Arlington, VA 22201 Ever since the 1920s, many US communications regulations that are nominally about technical issues3 have been abused by political actors.4 This was apparent when the Fairness Doctrine— a programming nondiscrimination requirement for broadcasters, derived from the existence of “spectrum scarcity”—was in effect. The FCC penalized radio stations for “throttling free speech.”5 The FCC declined to give certainty about its vague rule: “No single or exact rule of thumb for providing time, on a nondiscriminatory basis, can be stated for application to all situ- ations which may arise in the operation of all stations.”6 Predictably, broadcasters used these nondiscrimination rules to punish political opponents and unwanted speech by, for instance, filing of tens of thousands of fairness complaints annually7 in order to impose crushing regu- latory costs on political opponents.8 The Open Internet Order (OIO) is a similar FCC regulatory scheme that is notionally about networks but will be abused by future regulators and activists to chill speech, shape culture, and hinder innovation. For this proceeding we need only consult the coiner of “net neutral- ity,” Professor Tim Wu, who told members of Congress that these Internet regulations were needed so that the FCC would have the ability to shape “media policy, social policy, oversight of the political process, [and] issues of free speech.”9 There was nothing “broken” about the Internet or American online innovation before 2015 requiring a drastic change in regulatory philosophy. The United States is a global leader in broad- band subscriptions,10 and—more importantly—its firms are the primary source of new Internet- based services and applications.11 As Marvin Ammori wrote in 2014, before Title II regulation, “[T]he cost of running a basic Internet application fell from $150,000 a month in 2000 to $1,500 3. HUGH RICHARD SLOTTEN, RADIO’S HIDDEN VOICE: THE ORIGINS OF PUBLIC BROADCASTING IN THE UNITED STATES 116 (2009) (“[The FRC commissioners] tried to treat radio regulation as primarily a technical problem to be solved through engineering analysis while, at the same time, often taking into account the fundamental social, economic, and political aspects of broadcasting.”). 4. Id. at 136 (“Despite publicly justifying decisions based on engineering factors or through the use of the neutral language of engineering evaluation, archival records indicate that commissioners—following the example of the engi- neers—took into account a number of different factors, including political lobbying by members of Congress.”). 5. United Broadcasting Co. (WHKG), 10 F.C.C. 515, 515 (1945). 6. Id. at 518. 7. In 1962, the FCC received about 400 fairness complaints. In 1970, it received over 60,000. Responses to an FCC Cry for Help, BROADCASTING 21 (Dec. 27, 1971). 8. FRED W. FRIENDLY, THE GOOD GUYS, THE BAD GUYS, AND THE FIRST AMENDMENT 39 (1976) (“Our massive strategy was to use the Fairness Doctrine to challenge and harass right-wing broadcasters and hope that the challenges would be so costly to them that they would be inhibited and decide it was too expensive to continue.”) (quoting Bill Ruder about Democra- tic National Committee, his client, fairness doctrine efforts). 9. Net Neutrality: Is Antitrust Law More Effective Than Regulation in Protecting Consumers and Innovation?: Hearing Before the Subcomm. on Reg. Reform, Commercial & Antitrust L., H. Comm. on the Judiciary, 113th Cong. 70 (June 20, 2014) (statement of Tim Wu, professor of law, Columbia Law School). 10. The United States exceeds the Organisation for Economic Co-operation and Development (OECD) average for fixed broadband subscription rates.OECD Broadband Portal: 1.2.1. OECD Fixed Broadband Subscriptions per 100 Inhab- itants, by Technology, June 2016, OECD (Jun. 2016), http://www.oecd.org/sti/broadband/oecdbroadbandportal.htm. The United States is fifth out of 35 OECD countries in terms of mobile broadband subscription rates.Id. 11. ADAM THIERER, PERMIssIONLEss INNOVATION: THE CONTINUING CASE FOR COMPREHENSIVE TECHNOLOGICAL FREEDOM 53–54 (2016) (“The world’s 15 most valuable Internet companies . have a combined market value of nearly $2.5 trillion, but none of them are European while 11 of them are US firms.”). MERCATUS CENTER AT GEORGE MASON UNIVERSITY 2 a month in 2011. It continues to fall.”12 The United States became the global leader in technology and Internet application development in the absence of common carrier regulations. As was made clear after investigations by the Wall Street Journal13 and a majority report from a Senate committee,14 the FCC’s 2015 decision to ground rules in Title II of the Communica- tions Act of 1934 was made hastily after pressure in November 2014 from the “ersatz FCC” of policy advisers within the White House to classify broadband access under “Title II of the Telecommunications Act [sic].”15 Given that about-face by the then chairman to use Title II of the Communications Act, the result was a legally deficient Open Internet Order. While the OIO’s legal and factual errors and omis- sions are too numerous to catalog here, some of the OIO’s most significant problems and its unforeseen negative effects are discussed below. This reply comment makes the following points: 1. Internet access is best classified as an information service. 2. Classifying Internet access as a telecommunications service renders other statutory provisions meaningless. 3. The Open Internet Order poses significant First Amendment issues. 4. The Open Internet Order gives Internet service providers an increased incen- tive to filter content and violate open Internet norms. 5. The Open Internet Order and Title II regulation chill innovation. The deficiencies of the OIO cannot be remedied with mere tweaks, and the OIO and reclas- sification rules should be totally rescinded. INTERNET ACCESS IS BEST CLASSIFIED AS AN INFORMATION SERVICE The 2015 decision to classify Internet access as a telecommunications service reversed years of FCC and bipartisan consensus, including the de novo review of the issue in 1998 by the Clinton FCC, that Internet access is an information service.16 The “functions and services associated with Internet access,” the 1998 FCC said, “were classed as ‘information services’ under the MFJ. Under that decree, the provision of gateways (involving address translation, protocol conver- sion, billing management, and the provision of introductory information content) to information 12. Marvin Ammori, The Case for Net Neutrality: What’s Wrong with Obama’s Internet Policy, 93 FOREIGN AFF. 62, 66 (2014). 13. Gautham Nagesh & Brody Mullins, Net Neutrality: How White House Thwarted FCC Chief, WALL ST. J., Feb. 4, 2015, https://www.wsj.com/articles/how-white-house-thwarted-fcc-chief-on-internet-rules-1423097522. 14. U.S. SENATE COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIrs, REGULATING THE INTERNET: HOW THE WHITE HOUSE BOWLED OVER FCC INDEPENDENCE (Feb. 29, 2016). 15. President Barack Obama, Net Neutrality: President Obama’s Plan for a Free and Open Internet, THE WHITE HOUSE (Nov. 10, 2014), https://obamawhitehouse.archives.gov/net-neutrality. The White House statement urging reclassifica- tion cited to Title II of the wrong act. 16. Federal-State Joint Board on Universal Service, Report to Congress, 13 FCC Rcd. 11501, 11536–37, paras. 74–75 (1998). MERCATUS CENTER AT GEORGE MASON UNIVERSITY 3 services fell squarely within the ‘information services’ definition.”17 Until 2015, the FCC never classified Internet access as a
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